In Options Trading, How Does the Concept of “Settlement” Relate to Token Transfers?

Settlement is the final process of an options contract where the terms are fulfilled upon expiration. In tokenized options, settlement involves the transfer of the underlying assets or their equivalent value.

For physically-settled options, the actual ERC-20 tokens are transferred from the writer to the holder (for a call) or vice-versa (for a put). For cash-settled options, the difference between the strike price and the market price is calculated, and the corresponding amount of a stablecoin (an ERC-20 token) is transferred.